Below is an article from seekingalpha.com on how illegal short sellers may face RICO indictments.
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http://seekingalpha.com/article/87653-illegal-short-sellers-may-face-rico-indictments
Illegal Short Sellers May Face RICO Indictments
july, 29,2008
R.J Chopin
RICO, Racketeering Influenced Corruption Organizations Act, the law Rudy Guiliani used to bring down Michael Milken, and other Wall Street crooks, could be revisited in the SEC's struggle to clean up Wall Street's growing threat to the financial markets.
The SEC's crackdown against illegal naked short selling and rumor-mongering resulted in more than 50 hedge funds being slapped with subpoenas last week, according to the Wall Street Journal. Conspiracy theorist and CEO of Overstock.com (OSTK), Patrick Byrne, has embarked on a crusade to expose the nefarious hedge funds that practice illegal short selling. Byrne's web site, Deep Capture.com, has compiled a plethora of facts documenting, names, dates, times and videos of the players and their schemes.
Mark Mitchell, of DeepCapture.com, believes there exist a "hedge fund-orchestrated campaign to cover-up the crime of naked short selling." Depending on how deep the SEC probes, and what insidious facts they discover, we could see hedge fund managers, traders, and other employees facing scandalous, unprecedented charges under the infamous racketeering law, RICO. There is growing pressure for whistle-blowers to sound off or risk becoming the next scapegoat.
Clusterstock.com, reported, "the SEC is demanding both trading records and email correspondences" from subpoenaed firms. The inclusion of cell phone and text messaging records will undoubtedly be scrutinized. Concurrently, the NYSE Regulation Inc. is also investigating how some of its largest firms comply with false and misleading rumors that could undermine a stock's price. This is going to intensify.
Motley Fool, published an article on March 24, 2008, titled "The Naked Truth on Illegal Shorting," in which 100% of a company's shares were purchased by one individual, and were not available for shorting. Nevertheless, 60 million phantom shares were traded, according to owner. Subsequently, he filed a SEC 13-D compliant form.
Dick Fuld, CEO of Lehman Brothers (LEH), told market regulators that he has information that short-selling hedge funds colluded to bring down Bear Sterns (BSC). If Fulds's "information" is of evidentiary value, these hedge fund managers, and their cast of cohorts, could find themselves behind bars.
If the SEC diligently investigates the facts, we could see RICO indictments against illegal short sellers as early as Labor Day. Anyone charged under the RICO statue, even if they are found "not guilty," will become permanently damaged.
After observing the demise of Fannie Mae (FNM), and Freddie Mac (FRE) last week, it is expedient that the SEC move quickly to abolish the practice of naked short selling for all stocks. Short selling should only be allowed after the short seller has successfully borrowed the shares. The practice of selling shares that cannot be borrowed is a crime!
Discloser: No long or short positions in LEH, FNM or FRE.
1. Supreme Court Case
2. 150 Articles: SEC finally admits Naked Short Selling is a HUGE problem and a cause for financial crisis (July 15th, 2008 et. seq-September 15th, 2008 et. seq)
3. Richard Altomare's "Prison Inc." Book Excerpts
4. Universal Express Statement
5. Universal Express Recitation of Facts by General Counsel
6. Brief in Support of USXP Entitlement to Trial by Jury
7. Universal Express Complaint filed against SEC- March 3, 2004
8. USXP Full Page Ad in New York Times
9. Office of Inspector General Semi Annual Report to Congress- March 31, 2008
10. Richard Altomare's Speech on Naked Short Selling
11. USXP Quarterly and Annual Reports
12. Exhibit A and B: Universal Express Press Releases and Published Articles on Naked Short Selling 1998-2007
13. Universal Express Motion for Partial Summary Judgment
14. Supplemental Declaration of Chris G. Gunderson- Nov 13, 2006
15. Universal Express et al Motion for Reconsideration- March 8th, 2007
16. USXP Memo of Law in Support of Motion for Reconsideration
17. Universal's Declaration of General Counsel in Response to SEC's Request for a Receiver
